no matter the size of the stabilization, it will need to be scaled up. Syntheyes in peg mode, can autoscale then autocrop for you. If you don't care about cropping, then you won't even need to zoom in. That's only to remove black borders.

I would track and stabilize in HD to give the tracker more pixels to work with, then I would reposition and down-scale the stabilized footage to fit in the SD frame. Since you're going from HD to SD, unless the camera shake is very bad, you may never need to scale up.